Investors reselling foreclosures quicker than banks in wake of robo-signing fiasco
The foreclosure slowdown after the robo-signing scandal surfaced late in 2010 gave investors an advantage over banks when reselling these properties. Several large mortgage servicers froze the foreclosure process when employees were found to be signing foreclosure documents en masse and without reviewing the documentation, as required by law in some states. Servicers are still correcting these documents affected by "robo-signers," and the foreclosure process remains stalled. California foreclosures completed in May spent an average 344 days in the process, the longest time on record, according to ForeclosureRadar, which tracks filings on the West Coast. Notices of default in Oregon fell 52.3% in May after ReconTrust, a Bank of America (BAC) subsidiary temporarily increased filings in April. Foreclosure sales on courthouse steps remained mixed along the West Coast. Only in California, did these sales increase both back to the bank and to third parties in May. In Washington, foreclosure sales to a third party dropped 24.5%, and fell 19.7% in Nevada. However, third-party investors resold the homes they previously purchased at auction at a faster pace. "The slowing foreclosure process has left fewer affordable homes available for sale," said ForeclosureRadar CEO Sean O'Toole. "Foreclosure investors may be the only winner so far, benefiting by being able to resell homes purchased at foreclosure auction a little more quickly." Write to Jon Prior. Follow him on Twitter @JonAPrior.